Tuesday, July 28, 2009

A more formidable rival is on the way for Google. Yahoo is close to making Microsoft’s Bing its search provider. The deal, which would make Yahoo a more credible competitor to Google, is likely to be announced this week, and seems likely to be based on a revenue sharing rather than big guaranteed revenues and upfront cash.

AdAge has reported that consolidation of both search engines would give Microsoft roughly 30 percent share of the online search market. The major expectation from such deal was to get huge payment obligations from Microsoft which in a bid to surpass Google’s online supremacy would pay any price.

The deal would be good for users as more furious competition in search space will see more ground breaking technology innovation in future as Yahoo alone was unable to bring any such innovation on the ground. The deal would also provide relief to Microsoft which is certainly leaving no stone unturned to Stop Google’s growing dominance and now assault on its dominant businesses.

According to the company's report: “Yahoo would be allowed to sell search ads on Bing.com as well as its own site, giving it more search inventory to sell and making it a bigger player in the search sales front. It would also immediately be able to save millions by not having to maintain its own search infrastructure. The latest terms of the deal underscore Microsoft’s devotion to developing and owning technology vs. selling media.”

Earlier, Microsoft had an 8.4 percent share of the U.S. search market in June, with Yahoo grabbing 19.6 percent. Based on those numbers, a combined Bing/Yahoo engine would claim 28 percent of the market, which means MS 28 percent vs. Google’s 65 percent — making the consolidated search platform a legitimate competitor.